BoE deputy warns of strain on regulation after Brexit
The Bank of England's ability to regulate the UK's financial sector will be put under strain as a result of Brexit, deputy governor Sam Woods warned on Wednesday.
In a letter to Nicky Morgan, the new head of parliament's Treasury select committee, Woods said there was a “material risk” to the aims of the Prudential Regulation Authority (PRA) if its workload increased.
“It is incumbent on us to manage this burden but we may have to make some difficult prioritisation decisions in order to accommodate it,” said Woods, who is also chief executive of the PRA.
He also echoed calls by Chancellor Philip Hammond for a transition period after the UK officially leaves the European Union in March 2019 to allow time for changes to bed in.
“Some form of implementation period is desirable in order to give UK and EU firms more time to make the necessary changes to adjust to the UK’s new relationship with the EU in an orderly way,” he said.
In April, the PRA told businesses to improve planning for a cliff-edge Brexit and demanded that financial firms that use London as a base submit plans by July.
Woods said the PRA had received 401 responses and was now scrutinising them to make sure they were prepared for Brexit.
He added that the PRA would also use the information to establish whether there were “broader financial stability risks, which could arise from the collective execution of the contingency plans”.